This article is from the Australian Property Journal archive
CHRIS Lock’s IP Generation has secured Elon Musk’s Tesla for a former outlet centre in eastern Melbourne which it bought earlier this year for $43 million and is converting into a large-format retail hub.
The Australian arm of the world’s most valuable car company will occupy about half the space at the 288 Whitehorse Road, Nunawading, on a 12-year anchor lease, for its primary showroom and distribution centre in Melbourne’s east.
“Securing Tesla as the anchor tenant for 288 Whitehorse Road was the first phase and key focus of our asset management strategy at acquisition,” said IP Generation’s founder and CEO Chris Lock.
“By successfully executing the first phase of the repositioning plan we were able to substantially de-risk the leasing of the other main-floor tenancies, setting a strong foundation for the delivery of an attractive risk/return profile for investors.”
Three core tenants, including Tesla, have been secured for the former Brand Smart outlet mall main floor, with the property now 98% let at a weighted average lease expiry of 11.3 years by area. National fitness chain Revo Fitness and Ecosa, Australian mattress and sleep solutions company, have signed for 2,500 sqm and 2,000 sqm respectively of the redeveloped property.
The modern Revo Fitness gym will provide art facilities for functional training and group classes, while for Ecosa this will be one of its first bricks-and-mortar stores.
Initial works have commenced following receipt of the approved planning permit, with significant development to begin subject to final council endorsement of drawings.
IPG expects the property to be handed over to tenants in early 2025, less than 12 months after taking ownership.
The asset’s mezzanine level overlooking Whitehorse Road will retain the existing restaurant tenancies, including popular Malaysian hawker food offering Pappa Rich and steakhouse Squires Loft.
Sitting on a 25,824 sqm site, the redevelopment added to IPG’s $1.8 billion commercial property portfolio in April this year. Lock said the accretive leasing deals executed as part of the repositioning strategy mean the centre’s fully-leased net income is forecast to be approximately about three times higher than at acquisition.
The acquisition price was not even two-thirds of the $67 million Acure Asset Management paid for the asset in 2016.
